October 4, 2016 / 12:56 PM / a year ago

Sri Lankan rupee eases on importer dollar demand

COLOMBO, Oct 4 (Reuters) - The Sri Lankan rupee closed weaker on Tuesday on importer dollar demand in the absence of central bank intervention, and the market expects the local currency to be under downward pressure due to seasonal imports until mid-December, dealers said.

The spot rupee closed at 146.70/75 per dollar, edging down from Monday’s close of 146.55/65.

The rupee has been under downward pressure due to seasonal importer dollar demand, posting a 0.65 percent decline last week.

“We do not see any direction from the central bank regarding the spot rupee level,” a currency dealer said.

Finance Ministry Ravi Karunanayake said on Monday the government wanted a strong currency through higher foreign inflows and without interventions.

“We are trying to get into an equilibrium between the interest rates and exchange rate,” he told a Foreign Correspondents Association (FCA) forum.

He also said the government was planning to impose heavy penalties on tax defaulters and expand tax offices across the country as it aims to increase the tax base.

The central bank has been under pressure from the International Monetary Fund (IMF) to continue rebuilding international reserves and maintain exchange rate flexibility to develop the foreign exchange market further. (Reporting by Shihar Aneez; Editing by Sunil Nair)

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